Is Your Business Adequately Covered? What else could go wrong and should you be considering

A new financial year is a bit like “new year’s eve”, a time to make those New Year’s resolutions. Insurance is not typically first and foremost in your mind when you’re dealing with the day-to-day running of your business. That is until you need it. And there’s no denying the fact that insurance is vital to the safeguarding of your businessinterests and associated assets.

Most likely you have the basics covered, such as your building and its contents as well as public liability and public indemnity insurance. So what additional types of insurance should you consider? And most importantly what other aspects of your business can you insure?

The answer to the former question is really determined by the nature of your business. As for the latter question, the additional types of insurance you can foreseeably secure may just surprise you.

In the interests of keeping you in the know and ensuring your business is adequately covered, we’ve listed the key insurances every business owner should consider.

Product Liability insurance

While businesses generally do not set out to sell products that will have adverse consequences for people and/or their personal properties, accidents do unfortunately occur. It may be due to a once-off fault in the manufacturing process; down to a misprint in the instruction manual; or the consequence of an error on the customer’s part, but accidents happen. And when they do, you could be find your business at the wrong end of a legal suit.

Product Liability insurance ensures you can cover any costs incurred as the result of such legal action including paying out the injured party if you’re found liable. Product Liability insurance covers you against claims of death or damage caused by any products you sell, supply, deliver, repair or service.

Business Interruption insurance

In the event of a fire, flood or malicious damage to your premises, your building and contents insurance will likely cover the actual repairs, rebuilding and replacement costs. Problem is while your premises are being restored to their former state, your business operations are on hold and you’re losing out on revenue.

This is where Business Interruption insurance comes in. This type of insurance not only covers your ongoing staff costs and any additional business costs incurred if you, for example, temporarily relocate your operations to another premises, it will pay you out for your loss of profit.

Employment Practices Liability insurance

We are seeing more and more of these examples. Although you may not consciously set out to alienate or upset your employees, people can be unpredictable and if something happens that causes them to feel dissatisfied about their work situation they just might choose to pursue legal action against you or your business. In addition, the Fair Work Australia requirements and the cost of litigation means many employees may go to a lawyer who will recommend suing the employer for an amount that is enough to cover their fees and provide their client with money, but small enough that the business owner realises that if it goes to court, the cost will be significant, and therefore they should take the “offer” and just settle, despite whether this is the correct answer or not. Sometimes defending the right answer will end up costing more than just making a settlement payment. This can make it a costly decision if you do pursue the claim just on principal.

Employment Practices Liability insurance will compensate you for any damages or expenses incurred due to allegations of unfair dismissal; discrimination; harassment or related circumstances.

Management Liability Insurance

Which is a hybrid product incorporating Directors & Officers Liability, Entity Cover, Employment Practices Liability, Crime, Statutory Liability. In some policies Tax Audit insurance is also included however the cover is not as extensive as the stand alone policies on offer, particularly the master client policies offered through Accounting Practices.

Cyber Liability Insurance

With technology today, clyber liability insurance covering first party & third party exposure is more important. In the past year we had one of our clients suffer a ransomware / Crypto lock attack. Despite best efforts by business owners with back-ups and password protection, small business is very vulnerable in the cyber area across multiple platforms and devices.

Tax Audit Insurance

Tax man is getting tough. Are you covered? How likely am I to get random audit, review or investigation?

The ATO, along with other federal and state agencies, now have unprecedented access to taxpayer records, allowing them to specifically target previously un-reviewed tax returns. Now more than eve, Individuals, Business and Self-managed Superannuation Funds are at risk of being selected for random audit or review.

What audits, reviews and investigations are covered?

Income Tax

GST and BAS

Superannuation Guarantee

PAYG Withholding

Fringe Benefit Tax

Payroll Tax

Stamp Duty

Land Tax

Work Cover

Self-Managed Superannuation Fund

And many other lodged returns

What costs are covered?

All professional fees up to prescribed limit with no access

Retrospective cover for all previously lodged returns are covered

Specialist professional advisor fees

(e.g. quantity surveyors, valuers, and actuaries)

Legal fees &Bookkeeping fees

Is the cost tax deductible? Yes, a tax deduction can be claimed

Goods in Transit insurance

Should anything happen to the stock you have stored onsite, it is potentially covered by your building and contents insurance, but what happens if that stock is damaged or lost in transit? Whether you’re buying the stock or it’s part of your sales inventory, or even if it’s only destined for use on your premises, it could cost your business dearly to replace it.

Again your building and contents insurance will most likely protect your business in the event of fire, flood, malicious damage and similar risks, it will probably not reimburse you for any contents and/or stock that is stolen. And should your business include a property which is not regularly used or occupied, this property is at an even greater risk for burglary.

With Burglary insurance, however, your business contents and/or stock are covered in the event they’re stolen from your premises.

As you can tell, there are many options available when it comes to insuring your business. Should you do choose not to take action and have the misfortune to suffer one of the above scenarios, it could at best set your business back, and at worst spell the end of your business entirely.

Hindsight is 20/20 so don’t get caught short. Make the time to consult with a risk insurance advisor to analyse which types of insurance – the obvious and the not so apparent – will keep your business in the clear. Even if you determine that additional insurance is not necessary, it pays to review your insurance requirements on an annual basis to make certain you’re not over- or under-insured.

You may just end up saving on your premiums. And if not, you will at least have peace of mind knowing your business is adequately covered.

Do you think your business insurance requirements are in need of review? Please contact SMART Business Solutions on 03 5911 7000 or reception@smartbusinesssolutions.com.au and we can point you in the right direction.

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